The High Court interpreted a jurisdiction clause in an excess liability insurance policy as granting exclusive jurisdiction to the English courts, although the clause did not contain express terms to this effect: AIG Europe SA (formerly AIG Europe Ltd) v John Wood Group Plc  EWHC 2567 (Comm).
While normal principles of contractual interpretation will apply, the decision suggests that an English court is likely to find that a jurisdiction clause is exclusive unless it is explicitly declared non-exclusive, in particular if there is also a choice of English law. It is also in line with several previous decisions which interpreted the attribution of jurisdiction clauses as being exclusive, even if the word âexclusiveâ was not used (see our blog article here and more recently the decision of Axis Corporate Capital UK II Ltd v ABSA Group Limited  EWHC 861 (Comm)).
The decision recalls that the absence of the word “exclusive” is not decisive for the interpretation of a clause conferring jurisdiction and that clear words should be used when drafting a clause conferring jurisdiction. (whether the intention is for the clause to be exclusive or non-exclusive) in order to avoid uncertainties and disputes at a later stage.
The plaintiff insurers had issued an excess liability insurance program to the second defendant’s predecessor. The defendants potentially sought recourse to the insurance coverage and the second defendant therefore brought an action against the insurers in Canadian courts.
In response, all but one insurer filed an anti-suit injunction with the High Court of England on the grounds that the policies concerned contained exclusive jurisdiction clauses in English (or in one case, a clause of arbitration, which is not discussed in more detail in this article.).
In order to obtain anti-suit injunctions, insurers had to demonstrate with a “high degree of probability” that the policies contained English exclusive jurisdiction clauses (according to the well-established test, which was asserted by Christopher Clarke LJ in Ecobank vs. Tanoh  1 WLR 2231 to 2250).
The High Court (Jacobs J) held that two of the three jurisdiction clauses met the âhigh degree of probabilityâ test:
- One of the clauses (contained in the first and third franchise policies), expressly provided for English law and exclusive English jurisdiction and therefore clearly met the test.
- Another clause (contained in the second franchise policy) contained a choice of English law but no jurisdiction provision and did not meet the test.
- The remaining clause (in a Global Umbrella policy), contained a clause which provided for English law and English jurisdiction but did not use the word “exclusive”. The court interpreted this clause as requiring that the disputes be resolved by the English court and therefore satisfied the test.
This article focuses on the court’s review of the Global Umbrella policy clause. The relevant clause provided as follows:
“Choice of law 11. This insurance policy will be governed by and construed in accordance with the laws of England and Wales or Scotland (with respect to all policies issued in Scotland) and, except in the case of Scottish policies, the Court of Commerce from the High Court to the Queen’s Bench Division. of Justice Strand London WC2A 2LL will have jurisdiction over any dispute under this policy. “
The clause was in the general conditions section of the policy and it was not disputed that it was a contractual provision. However, it had to be interpreted in the context of a potentially conflicting clause contained in the previous âRisk Detailsâ section of the policy. This clause, the âPrimary Police Jurisdiction Clauseâ or âPPJCâ reads as follows:
âAny dispute regarding the interpretation of the terms, conditions, limitations, exceptions and / or exclusions of the policy is understood and accepted by the insured and the insurers as being subject to the same law and jurisdiction as the primary policy. Each party agrees to submit to the jurisdiction of any court having jurisdiction in such territory and to comply with all requirements necessary to give jurisdiction to that court. All matters arising out of this Agreement will be determined in accordance with the law and the practice of that court.
The main policy referred to a policy known as “Global CGL”. The Global CGL did not contain any express clause concerning applicable law or jurisdiction.
Interpretation of Article 11
The defendants argued that Clause 11 should be interpreted as a non-exclusive jurisdiction clause because it gives the parties the opportunity to go to the commercial court, but it does not oblige them to do so.
The court disagreed, holding that the words “shall be governed by and interpreted in accordance with the laws of England and Wales” meant that English law was compulsory, not optional, and there was no reason to think that a different and optional connotation should be given the words “the Commercial Court … shall be competent for any dispute under this Policy”.
The choice of English law in conjunction with the reference to English jurisdiction was also a powerful factor in favor of interpreting the choice of English jurisdiction as exclusive. Moreover, if Article 11 was intended to provide for non-exclusive jurisdiction, it would not have been necessary to include a specific provision relating to Scottish Police.
The court’s conclusion was also supported by the fact that there would be limited benefit to designating England as an optional jurisdiction without any obligation for either party to litigate in England.
Another consideration was that Term 11 was considered transitive, in other words, it required that disputes be submitted to English courts, rather than intransitive, which would simply mean that the parties would be referred to the English court if a proceeding was committed to it. Jacobs J noted, however, that some cases have questioned the importance of categorizing clauses as transitive or intransitive: see e.g. BNP Paribas v Anchorage Capital  EWHC 3073 considered here.
Relationship between Article 11 and the CPJC
The defendants also argued that Clause 11 should be ignored because it conflicts with the PPJC and therefore the Global CGL, which does not contain any clause identifying applicable law or jurisdiction. The approach proposed by the defendants was that the court should not assume that the parties were seeking to agree on a law and jurisdiction that could be identified with certainty; instead, the parties wanted there to be a âpermissiveâ approach to jurisdiction in the Global Umbrella, and envisioned that various courts could have jurisdiction to resolve any disputes between them.
The tribunal considered that full effect should be given to the clear agreement on law and jurisdiction set out in Article 11. The jurisdiction and applicable law regime envisaged by the defendants would introduce “extreme uncertainty” and should be considered. rejected. Specifically:
- There was no relevant jurisdiction provision in the Global CGL that could be interpreted as replacing Clause 11.
- The âpermissiveâ approach advocated by the defendants would lead to the conclusion that there was no single applicable law under which disputes under the Global Umbrella were to be resolved. The practical effect would be to subject the Global Umbrella to an appropriate floating law, depending on where the underlying claims were made.
- This was inconsistent with the express terms of the PPJC, the last sentence of which indicated that the parties had in mind a single applicable law to govern disputes under the Global Umbrella. Likewise, in English law, a floating own law is not authorized: see Armar Shipping Co v Algerian Insurance and Reinsurance Fund  1 WLR 207.